On December 31,2016,prior to adjustments,Accounts Receivable has a debit balance of $356,000 and the Allowance for Doubtful Accounts has a credit balance of $1,200.The firm estimates its losses from uncollectible accounts to be 4% of accounts receivable at the end of the year.The amount of the adjusting entry needed to record the estimated losses from uncollectible accounts is:
A) $13,040
B) $14,240
C) $15,440
D) $17,800

Question

Quizplus · Accepted Answer

The estimated losses from uncollectible accounts are 4% of $356,000, which equals $14,240. Since there is already a credit balance of $1,200 in the Allowance for Doubtful Accounts, the adjusting entry needed is $14,240 - $1,200 = $13,040.

On December 31,2016,prior to Adjustments,Accounts Receivable Has a Debit Balance